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Market reduces inflation estimate, predicts higher GDP growth

06/06/2017 | 16h17

Financial market analysts have again lowered their forecasts for inflation this year. The current expectation is that Brazil's Broad Consumer Price Index (IPCA) will end the year at 3.90%, down from previous projections of 3.95%.For 2018, current estimates point to inflation ending the year at 4.30%.


At the same time, experts expect the Brazilian economy to end the recession, forecasting a 0.50% increase in GDP, slightly up compared to the 0.49% estimate of a week ago.


The information is part of the Focus Bulletin, a weekly publication released by the Central Bank that compiles and publishes forecasts produced by about 100 independent market analysts.


Boosted by the impact of economic reforms, GDP grew by 1% in Q1 2017 after eight consecutive quarters of decline. Inflation has been falling steadily in recent months, reaching 4.08% in year-to-date terms for April.


Given this positive scenario, analysts expect the basic interest rate, the Selic, to end the year at 8.50%. At the last meeting of the Board of Directors of the Central Bank, the rate was reduced from 11.25% to 10.25% per year.

Font: BrazilGovNews
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